This document outlines accounting standards for government grants in India. It discusses the recognition and types of government grants, including monetary and non-monetary grants. It also addresses the treatment of monetary grants related to depreciable and non-depreciable fixed assets as well as grants related to revenue. The document concludes by discussing disclosure requirements and significant differences between this standard and IFRS/IAS-20 and US GAAP.
2. Recognition of government grant
The enterprise will comply with the condition
attached to them.
The grant will be received.
3. Kinds of government grant
Monetary govt. grant.
Non monetary govt. grant.
4. Non monetary govt. grant
Grants are given at concessional rate, then such
assets are accounted for at their acquisition cost.
Grants are given free of cost then such assets
recorded at nominal value.
5. Monetary govt. grant
grant related to depreciable fixed assets
1. Grant is shows as deduction from the gross value of
assets .when the grant equal to the cost of assets, at
nominal value.
2. Grant treated as deferred income.
6. Grant related to non depreciable fixed assets
Grant is shown as deduction from the gross value
of assets when the grant is equal to the cost at
nominal value.
2. Condition attached to grant are fulfilled, credited to
capital reserve account.
1.
7. Grant related to revenue
Should be recognized in profit and loss account
over the period to match them with related costs.
2. Either be shown as ‘other income’ or be deducted
from the related expenses.
3. A grant is to be received as compensation for
expenses or losses already incurred, should be
recognized in the profit and loss of the period on
which it becomes receivable as extraordinary
items(AS- 5).
1.
8. Refund on govt. grants
Refund of grants related to revenue.
Refund of grants related to specific assets.
9. Disclosure
The accounting policy adopted for govt. grants
including the methods of presentation in the
financial statement.
The nature and extent of govt. grants recognized in
the financial statement.
10. Significant different with IFRS/ IAS-20 and
US GAAP (SFAS-16)
AS-12 does not state about
fair value measures of
non monetary grants whereas IAS-20, fair value at
the time of initial recognition and US GAAP
recognize at fair value.
Grant in the nature of promoter contribution is
credited to capital as per AS-12, if however as IAS-20
such grant should be treated as different income.
refund of grant is treated as extraordinary items as
per AS-12 whereas in IAS-20 it is treated as a change
in estimate.
